Everything you need to know about Wi-Fi tethering

Buried inside many of the latest smartphones is a capability that few people take advantage of. A feature called tethering lets a phone go beyond talk, email and Web surfing to act as a mobile hotspot that can supply Web access to nearby computers, tablets and other devices.

"It lets [smartphone users] always have the Web with them without taking any extra equipment along," says Allen Nogee, research director for wireless technology at market intelligence firm In-Stat.

Like dedicated mobile hotspot devices, these phones connect to a mobile data network and then act as a Wi-Fi router, distributing the bandwidth to nearby clients. There is a price to pay for the convenience that hotspot phones provide: Three of the four national networks charge an additional fee to use tethering. On the other hand, you don't have to worry about finding a public Wi-Fi hotspot or having another device to buy, lug around, keep charged and accidentally leave behind.

Want to know more? After speaking to analysts, network engineers and other mobile experts, I've rounded up and answered the 12 most common questions about smartphone tethering, including options and carrier policies. Additionally, I used a couple of smartphones as hotspots in various parts of the U.S. and Europe to discover what the experience is like in real life.

Finally, I've gathered a listing of all the hotspot-capable smartphones currently available from the Big Four U.S. carriers, including how much they cost, which network(s) they work on and how much tethering services cost.

FAQ: Tethering with a hotspot phone

What is tethering?

Tethering is the ability to share a smartphone's Internet connection with computers or other devices. It can be accomplished by connecting the devices with a USB cable, a Bluetooth wireless link or a Wi-Fi connection. This story concentrates on Wi-Fi hotspot tethering because it's convenient and can service more than one client at a time -- and because just about all laptops and tablets have Wi-Fi built in these days.

How does a hotspot phone work?

After connecting to the mobile phone data network, the smartphone can distribute its Internet connection to several clients via a Wi-Fi connection. Any Wi-Fi-enabled computer or tablet can connect to it, and the real bonus is that the Wi-Fi router is inside your phone so there's no extra stuff to carry with you and no other device to recharge.

Which phones and networks support Wi-Fi tethering?

All four national mobile data networks -- AT&T, Sprint, T-Mobile and Verizon -- offer phones that can act as Wi-Fi hotspots, and there are about 60 smartphones available today that can perform this task. They come from the major phone makers; use a variety of mobile operating systems, including Android, BlackBerry, iOS, webOS and Windows Phone; and come in a variety of sizes and shapes. At the moment, Android offers the most options, with around four dozen hotspot-capable models available.

I've used phone hotspots in my office, in my home, on trains and in a moving car. Basically, wherever you can get a mobile data connection, you can broadcast it with a hotspot phone.

Does Wi-Fi tethering make the phone any bigger or heavier?

No. Wi-Fi tethering requires that the phone have a Wi-Fi chip built in, but smartphones already have this for connecting at Internet cafés or at the office. The hotspot ability is enabled by software and doesn't add to the bulk of a phone. In fact, there are hotspot phones that weigh as little as 3.2 oz.

Is the setup hard to do?

Anyone who's set up a Wi-Fi router or used a mobile hotspot can enable Wi-Fi tethering. To get the phone to act as a Wi-Fi hotspot, you need to start the tethering app by tapping on its icon; it usually has some variation of "mobile hotspot" in its name so it's hard to miss.

The details vary based on the phone in question, but after clicking a box to turn the hotspot on, you'll typically need to configure it by typing in a network name, choosing its encryption type and designating a security password. (You only have to do this once.) Most hotspot phones are up to date with WPA2 protection so that outsiders can't tap into your mobile network or read any data. Setup takes a couple of minutes; when you're done, the phone is ready to be used as a hotspot.

How difficult is it to connect devices to the phone's hotspot?

It's no more difficult to connect a notebook or tablet to a hotspot smartphone than it is to connect one to a home or office Wi-Fi router. The network name shows up on the Wi-Fi connection screen, and you are required to type in the network's password the first time you connect. After that, you can set it up to connect automatically.

What clients can connect to the hotspot and how many clients will it support?

A hotspot phone can link to any device that has Wi-Fi networking. I've used hotspot phones with various laptops, an iPad and several Android tablets.

The phone can supply an Internet connection to as many as 5 to 8 clients, depending on the model. Be warned, though -- the connection speed is often not enough to spread across several users, and you might be disappointed.

What speed and range can be expected?

The connection speed depends on many variables, including the cell network you're connecting to, how far you are from the network's closest transmission tower and how congested the Internet is at that moment in time. I've had connections on Verizon's 4G LTE network that hit 25Mbps, but others that barely got to 100Kbps. About 300Kbps of bandwidth is a reasonable expectation.

When it comes to 3G and 4G data networks, geography is destiny. Even as Sprint and Verizon roll out their 4G networks to select cities (with AT&T's LTE rollout due to begin soon), there are still many places in the U.S., particularly in the upper Midwest, that don't have data coverage, period. Consult the coverage maps on the carriers' websites to find out if you'll be able to access a data network where you need it.

Typically, the phone's Wi-Fi signal has a range of about 100 feet, so it works well in a temporary office, at the beach or even in the largest hotel suite. One thing to keep in mind is that, as with Wi-Fi routers, the signal's strength and bandwidth decline as you get farther from the hotspot.

Can you tether and talk on the phone at the same time?

That depends on the phone and network it lives on. Most 4G phones can do this without a problem; phones on older CDMA-based 3G networks can't; and phones that run on HSPA-based 3G networks are a mixed bag. If this is an important factor, it's best to consult our chart and the carriers themselves to determine if a particular phone can support voice and data at the same time.

How much does tethering cost?

Each network's tethering plan is different, so it's hard to compare them. Shop carefully to reduce the sticker shock when the first bill arrives. Here are a few things to keep in mind:

Verizon charges $20 per month for tethering on top of your base data plan (which costs between $30 and $80), and it provides an extra 2GB of data per month.

Sprint charges the most to use your phone as a hotspot: $30 in addition to your regular data plan (costs range from $30 to $100). It doesn't provide any extra data above what your data plan offers. If you have an unlimited smartphone data plan, your mobile hotspot data use is limited to 5GB per month.

T-Mobile is the cheapest at $15 per month above your regular data plan (prices range from $40 to $70). Like Sprint, it provides no extra data.

AT&T doesn't charge extra for tethering but instead has a complete 4GB data plan that includes tethering for $45 per month.

If you go over the allotted amount of data, AT&T, Sprint and Verizon will charge an overage fee and likely try to sell you a monthly plan with a larger limit. T-Mobile will slow your data flow to a crawl.

To subscribe to a tethering plan, you set up a monthly payment that's included in your bill whether you use tethering that month or not. However, there's no long-term contract attached to these plans, so you can cancel and restart your plan as needed; you just have to remember to actively manage it in this way if you need tethering only occasionally.

None of the carriers offers a one-time or day-pass option for tethering.

As always in the mobile world, things can change quickly, so check with your carrier for the most up-to-date pricing and plan info before making any decisions.

Can I use a third-party tethering app instead of paying the carrier's subscription fee?

Yes and no. If you like to surf dangerously and if your phone has Wi-Fi built in, you can download and use apps such as MyWi for the iPhone, Android WiFi Tether for Android or JoikuSpot Light WiFi Hotspot for Symbian to turn your phone into a hotspot. Each basically does what the phone's built-in tethering app does, but without the knowledge, approval or expense of the carrier.

Needless to say, the carriers don't like when you do this because it cuts into their revenues, and they often monitor their networks for these apps. If you get caught, some networks will shut off your service, while others will automatically upgrade you to a tethering plan and start charging you for the service. In other words, your next monthly bill might contain a surprise. My advice is to read the very fine print in the service agreement to see what your rights are and where you stand.

Can these phones work as hotspots overseas?

Some can, some can't. You'll need to make sure that your phone of choice can before buying it. Generally speaking, if the phone supports HSPA or HSPA+ technology, it can work throughout Europe, Australia, and New Zealand, as well as parts of Africa, Asia and South America. You'll need to upgrade your service plan to include international data, though.

As an alternative, when you're out of the country, In-Stat's Nogee suggests renting -- through a phone rental service such as CelloMobile -- a smartphone that can act as a hotspot. For example, you can rent an HTC MyTouch 4G, which will work in any European Union country as well as in Switzerland, and will act as a hotspot for up to four devices. It costs $12 a day, $80 a week or $200 a month and comes with 500MB of data per rental. The best part: no long-term commitment needed.